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Rules: "Jurisdiction cannot be created simply by the preservation of a claim in a plan... [and] Section 1123, in and of itself, does not grant, nor does it confer, or in any way serve as a proxy for the grant of bankruptcy jurisdiction... jurisdiction must be premised upon 28 U.S.C. §§ 1334 and 157... and that for 'related to' jurisdiction to be triggered under § 1334, a 'close nexus' between the claims and the bankruptcy plan or proceeding must exist." The rule in Resorts Int'l requiring a close nexus between the claims and the bankruptcy plan or proceeding applies not only to reorganization cases but also to liquidation cases.
Holding: Affirmed.
Reasoning: The court could not find error in the bankruptcy court's reasoning that, although the claims arose prepetition, their resolution did not require the interpretation of the plan and would therefore not affect the bankruptcy estate or the Debtor.
Facts: Caplin & Drysdale ("CD") were retained in the debtor's bankruptcy as national counsel for the Asbestos Claimants' Committee counsel. CD filed a fee application seeking certain fees and expenses. The US Trustee objected to paying the full hourly billable rate for travel time that was not spent working. At trial, a CD partner testified that it was the firm's policy to bill for travel time at the full hourly rate. Moreover, the same partner testified that during his tenure at a different firm, the practice was the same. Lastly, the same partner testified that it was his understanding, based on his conversations with colleagues in New York, that firms set their billable rates on the understanding that they would be billing the full amount for travel time not spent working.
Ultimately, the bankruptcy court reduced CD's fees by 50% - or $135,685.80 - for the travel time not spent working.
Issue: Whether the bankruptcy court abused its discretion in awarding attorneys' fees at half the hourly sought rate for time spent traveling but not working.
Holding: bankruptcy court's reduction is affirmed.
Rule: (1) A bankruptcy court abuses its discretion when it "'(1) applies an improper legal standard or follows improper procedures in calculating the fee award or (2) rests its decision on findings of fact that are clearly erroneous.'" (2) The burden of proving the reasonableness of fees under § 330 of the Bankruptcy Code rests on the fee applicant. (3) Courts have broad discretion in awarding fees.
Reasoning: CD did not make a sufficient showing with respect to how comparable firms billed to allow the court the make a determination of the reasonableness of its fee requests. CD did not identify any other firms or produce evidence of other firms' billable time. However, there is case law going both ways - that a firm billing a full hour for travel time that is not spent working is ok and vice versa - and courts recognize the lack of consensus on the issue. However, § 330 specifically allows for a reduction in the fees requested. Lastly, notably, CD's employment agreement did not specify that it would be charging full price for travel time not spent working. Thus, the bankruptcy court did not abuse its discretion.
Knight, et. al. v. Luedtke, et. al. (In re Yorkshire LLC), 540 F.3d 328 (5th Cir. 2008)
